One problem related to speed sensor has been reported for the 2007 Subaru Outback. The most recently reported issues are listed below. Please also check out the statistics and reliability analysis of the 2007 Subaru Outback based on all problems reported for the 2007 Outback.
'07 Subaru Outback 2. 5i w/ automatic transmission. When transmission was cool code p0720 was set for vehicle speed sensor failure. After driving for a while error would reset as sensor presumably warmed and began working normally. I identified and confirmed the front vehicle speed sensor was the problem. A week after the initial failure, and prior to my being able to replace the sensor, the behavior of the failure changed: at highway speed (60-65mph) the car would automatically shift into first gear and feel like the brakes were slammed on. This being an obviously dangerous and scary situation, my short term solution was to cut the wire going to the sensor until I could replace it. (the sensor is hard-wired into a 3-sensor wire harness that requires access inside the transmission to be replaced). Just prior to the car automatically shifting into first gear I also heard the safety solenoid in the shifter assembly (the one that prevents the operator from putting the shifter into park while the car is moving) quickly cycling on and off, so my assumption was that a partial signal was being seen by the onboard computer and interpreted as if the vehicle was traveling at a slower speed than it really was. After cutting the speed sensor out of the circuit this aspect of the failure has not repeated itself.