The book time for an auto transaxle overhaul/rebuild including R+R is 12.6 hours. At $90/Hr. that $1,134 right there. Now you need parts fluids, and of course your local sales taxes. 
For the price range you are indicating you are most likely looking at only a "typical" "kit" overhaul of the automatic section and possibly a rebuilt torque converter. The basic kit does not include pistons, 2nd gear brake band, clutches or the steel plates or any hard parts such as valve body or pump. There are different levels of kits available with the better kits offering more parts.  Also, are the seals in the differential being replaced? All of them?  Basically you are being quoted the typical entry level repair based on the symptoms given. It is possible that is all that is needed. Ask what you are really getting. Most important is the depth of the warranty. 

Dennis

-----Original Message-----
From: Vanagon Mailing List [mailto:vanagon@gerry.vanagon.com] On Behalf Of John Rodgers
Sent: Tuesday, May 17, 2016 2:39 PM
To: vanagon@GERRY.VANAGON.COM
Subject: Transmission woes - '91 Carat autotranny won't shift into 3rd.

The saga continues. My mechanic has run out of ideas. Doesn't know what else to do, and being essentially an engine rebuild specialist, suggests I get it to a transmission shop and have them check it out. S far all local shops but one turned me down. I got everything from "we don't work on VW'S of any kind" to " our insurance doesn't cover vanagons". I think basically they just don't wan't to do Vanagons. The one exception was AAMCO Transmissions of Birmingham. They are a franchise outfit, and said they would do it, but for this area I thought the pricing a little high,'  like
$1500 to $1800.

Anyone experienced with people?

John