A system and method of dithering speed and/or torque for shifting a transmission of a vehicle having an engine, a reversible, variable displacement hydraulic motor/pump which can be driven by the engine, a hydraulic accumulator supplied by said motor/pump, and at least one reversible hydraulic driving motor for propelling the vehicle supplied with fluid by the hydraulic accumulator and/or by said motor/pump operating as a pump. A transmission unit connects the engine with the variable displacement hydraulic motor/pump during a first mode of operation (city mode) and connects the engine to a vehicle drive wheel during a second mode of operation. The system utilizes stored hydraulic energy to dither the output of the driving motor in order to achieve quick and smooth shifts between city and highway mode, or between various ranges within the city mode.