AUTO uses a lookup table to determine the mode to use. The lookup table is based on the current FCC band plans, which largely call for NFM use in most/all bands. However, there is still a large population of "legacy" users who are grandfathered in by existing licenses using FM.
In the upcoming models (BCD396XT and BC396XT) we allow the band defaults to be user-modified so that "AUTO" can mean other than what we put in at the factory. (Not lots of help on the BCT15, but can't resist the opportunity to plug changes we've made based on user input...)