it sounds like the governer gear there made of hard plastic and when they wear or break you lose 3rd gear found this on the web:
Your governor gear is either stripped or destroyed. It's extremely easy as far as labor, beginner skill level (if you have a knowledgeable person or book/article to reference) but finding the part is a headache. Get the part before you do anything else. It's a small plastic gear (stock) and I've heard that there's a brass one available, but haven't found it yet. From the dealership, the gear alone is about $40. The governor assembly is about $200. There's 99% chance you only need the gear. I'll give you a basic walk-through of how to check, but I would strongly advise not to proceed until you have at least the gear in-hand. Also, make sure the gear is correct.
The 4-speed transmission has a 16 spline gear that is about an inch and a half long, whereas the 3-speed transmission has a 19 spline gear that is about 2.5 inches long. They are NOT interchangeable.
First, get everything out of the way. Disconnect and remove your battery. There is a small fusebox bolted to the battery tray. Remove the two nuts holding this on, and separate it from the battery tray, letting it hang behind the radiator. Remove the battery tray. The air box is going to have to come out as well, so you have room to see and work. Easiest way to do this is to remove all of the hoses as far from the airbox as possible, leaving them attached to the airbox so it all comes out as one piece. There's a small vacuum line just out-of-sight, that plugs into the silencer, feel around on the firewall side, and simply unplug it. Once all of this is safely out of the way, it's time to get down to business.
In your newly-cleared work area, on the top of the transmission closer to the firewall than to you, you'll see what looks like either a black plastic, or silver (but dirty) metal, 'cap'. There is a snap-ring set just inside the ridge around the top of this, with a seal ring under it. Pry this snap-ring out carefully, unless you intend to replace it. With that out of the way, the seal ring will come right up. Using a large vice grip, or a large pair of water pump pliers, grip the cap and work it out. There's an o-ring around the bottom of this, so it make take a little back-and-forth to get it all the way out. Once you have gotten that off, there is what looks like a complex metal block underneath. This is your governor assembly, and it's actually about 10 inches long. To reiterate, this entire assembly should be around $200 from a dealership. You should be able to pull this outwith minimal effort, and the bottom is hardened plastic, so be as gentle as possible. Once removed, inspect the plastic gear on the bottom. If it's chewed up but otherwise intact, replace it and you're okay. If it's shattered and/or obviously missing pieces (which has been the case in several of the rebuilds I've done), you'll have to drain at least a quart of fluid to see into the bottom of the hole where the governor sits, and make sure there are no pieces floating around in there. I had to use a dentist's pick to get the pieces out. If you are going to replace the entire governor assembly, remove the old one and skip the next paragraph.
If you want to save a nice chunk of money, and just replace the gear:
Put the governor in a vice, and as gently as possible, hammer the holding pin out of the gear and governor shaft. Once removed, the old gear will slide right off. Slide the new gear on, put the pin in place, and you're good to go.
Slide the new (or newly rebuilt) governor gear assembly back into the transmission, making sure it seats flush. Replace the cap you removed, the seal ring, then the snap-ring. Put the airbox back in, ensuring all of the hoses and clamps are back in place - especially that pesky one hidden behind the silencer box. Replace your battery tray, the fusebox thereto attached, and your battery and hold-down. Replace any transmission fluid you had to drain, start the car and let it run for 5-10 minutes to warm up the fluid. With your foot on the brake, manually shift it through all the gears to ensure the fluid gets into all of those little spaces. Put it back in park, turn the car off, check the fluid again, and add as needed.