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Yes it does, and it's is no big deal. Can be defeated in a couple minutes, some don't even bother because it hardly ever affects the driving. It's there to avoid the gas guzzler tax. Thank your wallet for that feature.
As indicated, it really is no big deal. It only makes you do that if you are trying to shift out of first at low speed (under 20 if I remember correctly) and only partial throttle.
Can easily be overcome by getting the rpm's up and shifting at a higher speed. Most people either get it reprogrammed out when they get their car tuned (if making modifications) or there is an inexpensive plug-in adapter to override this "feature".
It was a big deal to me, so I got rid of it. My commute is all low-speed city driving and even though I would try and be careful to stay out of the cags region, it would still hit me once every few days. The car sounds really unhappy in 4th at 15 mph, that's for sure.
CAGS is activated if the car's speed is between 15 and 20 mph at low to medium throttle. If you shift before 15 or after 20 or are aggressive on the throttle it will not be activated. Not a big deal. The first thing to learn is to shift sooner Vs later. When running in traffic with my Z I am in 4th gear by the time I hit the upper 20s and run in 5th gear from about 35 mph to 45 mph. If the car is a standard C5 you probably would delay using 5th until the speed is closer to 40 due to the transmission ratio differences between the C5 and the C5Z.
It's an inexpensive bypass module that installs in 5 minutes and you've eliminated it. Basically unplug the electrical connector on the solenoid on the side of the transmission, plug the connector into the bypass module wire tie it out of the way. Put a dust cover plug on the solenoid.
Drive it like you're supposed to and the cags will never come into play, blah blah blah.
There are plenty of local low speed applications where it's a pain in the neck.
Get the cags eliminator and be done with it. It's a great and cheap mod.
It was put in to satisfy the cafe regulations.