Yes, it should be automatic every time they pit, but you can pick who takes over manually from the menu in the pit lane. I don't think that you can nominate the next driver while racing before the current one hits the pit lane, but I could be wrong there.
It usually goes straight down the list: 1,2,3,4,1,2.... I'm not sure if it can change based on who has more strength or not, doubt it. I've found that if you have one driver that is superior you can usually get him to full strength and back in the car after only running two of the others.
Of course you do have to bring a team of drivers to the track in the first place. You can't call up somebody you left home.