Since I always drive the smart even though the wife is usually with me, I've never experienced the auto mode as a passenger. Today, the wife drove and she didn't want to use manual since she's unfamiliar with driving it. As I rode and she drove in auto, the auto mode didn't seem to be nearly as 'lurchy' and abrupt as I remember. The 2.0 upgrade has been performed, but I wasn't overly impressed after the upgrade when I tried auto.
From a driver's perspective, the auto mode seems unnatural since you know when you want to shift, but when you're not driving and unconcerned, it seemed pretty decent.
I'll have to give it another try, but will probably stick to manual. But, that's the great part, you can choose either!
