Abstract: A two speed axle assembly for automotive vehicles, providing positive shift engagement in shifting between direct and overdrive modes. Input and output shafts carry respective input and output sun gears meshed with compound planetary gears within a rotatable planet carrier. A pair of clutch packs selectively lock the planet carrier either to the input sun gear for rotation therewith as a unit for one mode of operation, or to the axle carrier case so that rotation of the planet carrier is prevented and the planet gears rotate about their axes to provide the other mode of operation. Compression springs are utilized to normally load the one clutch pack and lock the planet carrier to the input sun gear for the direct drive mode. A hydraulic bladder assembly is provided for shifting from the direct to the overdrive mode. Upon hydraulic inflation of the bladder, a bladder piston simultaneously unloads the one clutch pack and loads the other, locking the planet carrier to the axle carrier case.