Considerations to build a new factory, specialized on production of spare parts for heavy duty trucks in the Ukrainian city Lviv, were made by the Soviet government directly after the second world war and the construction was finalized in 1949.

The intention was to replace the obsolete and virtually the only existing city bus model in the Soviet Union, ZIS-155.

At that time the LAZ-engineering team had sufficient construction experience, due to the development of the crane and trailer models in the last years.

The team also consisted of young and ambitious professionals that were obsessed by the idea of creation a fully new and progressive bus model.

[16] For that goal, the Soviet Union ordered the cutting edge bus models from West Germany manufacturers, among them the Mercedes-Benz O 321 and Magirus-Deutz O3500H/O6500.

For the first time in the Soviet Union, the bus received a rear-longitudinal-engine with rear-wheel-drive layout (Predecessors from ZIS had a front-engine-layout).

An integral design consists of extruded profiles that are collected into a grid frame along with other supporting components, such as engine and axles.

It was a specific feature of all prototypes, but was removed from the serial models due to bigger window leafs.

One of the main weaknesses was the narrow inner space design, as for a vehicle, advertised as a bus for urban purposes.

The passenger's comfort was increased and paired soft seats, based on spongy rubber and sheathed with semi-synthetic textile, were installed.

Such a bus type operated between cities and nearby suburban and rural areas and had rarely to stop on the trip.

After the bus front design was changed and many functionless and decorative details were removed, like the "Lviv" lettering and the false radiator grille.

LAZ-695B prototype Due to haste in the development of the first version and ill-considered borrowing of ideas from western counterparts, the LAZ-695 had a lot of weaknesses.

The constructors already have known about that, but had to find the golden mean between the elegance, due to the glazed roof, and good stability of the body.

In the military version of the LAZ-695B, the wounded on stretchers could be positioned in three or two rows on floor stands as well as on suspension mounts, in two or three tiers.

Instead, there were written special books that described a fast conversion of soviet civil buses, beneath them the serial LAZ-695, into ambulance transport vehicles for military purposes.

On 12 April 1961, the bus was used to bring the first astronaut in Outer space, Yuri Gagarin, to the Vostok spacecraft.

[32][33] Accordingly, already at the end of the 50th, the LAZ factory, together with NAMI, begun to develop a modern, fully automated hydrodynamic transmission, especially for urban buses.

But the production capacity of the KZET facility was insufficient and already in the same year, 1963, the car assembly manufacturer in Odesa, ODAZ, begun to produce the ODAZ-695T trolleybus on the base of the LAZ-695B.

The rear axles, with a planetary transmission in the wheel hubs, were delivered from the Hungarian automaker Raba.

The air intakes, which in earlier models were positioned beneath the rear window, were relocated behind the rearmost lateral one.

After the dissolution of the Soviet Union and the dramatic increase of fuel prices, a lot of gasoline-powered LAZ-695N buses were also converted into gas powered models by special authorized organizations.

But the plans were every time postponed into the far future, particularly because there was no need for such a type of engine in the Soviet Union, due to the abundance in Gasoline.

Only after the Dissolution of the Soviet Union and the rise of fuel prices, a gasoline-powered engine on a bus became fully obsolete.

So in following years different diesel engines, from soviet manufacturers, were installed experimentally on serial bus models.

[45] Meanwhile, the interstate automotive trade association propose to install the inline-four D245.9 diesel, from the Belarusian Minsk Motor plant.

[46][47] After the DAZ bus manufacturer became a subsidiary of the LAZ organization in 2002, the production of the N, D and NG modifications were relocated there and continued until 2011.

Although made with obsolete technology, the buses were in great demand due to their low prices and proven construction.

[1] After the fall of the Soviet Union, the LAZ factory loses its leading role as a bus manufacturer.

There were many new bus series to be used as the successor to the 695 model, like the LAZ-4202,[49] but none could achieve its success, due to poor technical quality.