The building of the factory started in 1952, and in the same year the first buses PAZ-651 (based on GAZ-51) were produced. The government had a plan to produce 10,000 buses per year. In 1960, the production of new model PAZ-652 started. It was replaced by PAZ-672 in early 1968, and this bus had a large family of various modifications. 1989 saw a start of production of the new modernised model PAZ-3205.
The small PAZ buses have long been used by Russian "fixed-route taxi" (marshrutka) operators.
One PAZ 672 came to Chile between 1970-1971 with the installation of the soviet KPD factory of concrete blocks for prefabricated buildings, in Quilpué. This was one of the many symbols of the relation between the Soviet Union and the Unidad Popular government in Chile.