The thing to consider is if NISSAN intended the S12 to compete with the AE86. And the answer is no. The S12 was in design before that, but so was another Toyota car. Toyota had been putting a LOT more effort into a better-established legacy known as the Celica, whereas the Trueno was a new, quick and dirty platform. The Celica saw all the official racing. The Celica got the best aftermarket. the RA65's RWD chassis had been in production since 1981, and was a much better option than the Nissan S110 Silvia/Gazelle/200SX, both for racers and for the general consumer worldwide. And IMO it even looked nicer.
The S12 platform was Nissan's response to the RA65 that had easily outsold the S110. It was essentially an RA65 with a little more visual refinement (note the slightly rounded corners and rounded sides of the rear glass, for example), with a LOT more fancy electronics and a more modern interior design. It wasn't designed to compete with the Celica Supra, however, because Nissan probably saw the new 300ZX (Z31) as more than capable of that (which of course it was). But the obvious choice to give the S12 only four-cylinder powerplants, of which in most countries were economical and slightly peppy engines, was an obvious attempt to counter the 22RE that had propelled the Celica series into popularity.
The AE86 wasn't a part of the consideration. Why? Because it was developed around the same time. With a totally different purpose in mind. Recall that the TE chassis was designed with RWD. The AE series was more of a sportier TE. Which the TE wasn't designed to compete with the S110 (of course) and surely the TE nor the AE were not a response to the successful first gen and second gen Z cars. That was, of course, the job of the Celica Supra.
The AE86 and its variants are something of an oddball community of cars and owners, and for good reason. There really ISN'T an analog to them. They borrow visual designs popular cars of the time, including their own Celicas. Then again, even Honda had a hatchback Accord around the same era. So it's not fair to suggest that the AE86 is a "rival" really of any car. It sort of stands on its own, for better... and even for worse. Why for worse?
Sure, the 4A-GE was a great engine, but it was like a limited-version of the AE86, as most of them had the lesser SOHC engine and the shittier open-differential rear end w/ drum brakes. AE86 was, if anything, an experiment. Not a sure bet for Toyota. Again, it lacks the legacy of the Celica because Toyota didn't place as much interest in it as they did the Celica namesake. It was enthusiasts and then later popular media (Initial D) that gave it a life of its own, one that Toyota never intended.
But the S12 fulfilled exactly what Nissan intended for it. It answered the challenge of the RA65. Unfortunately, by then Toyota had already seen the writing on the wall, and in 1985 the new Celica went to a FWD design that made more sense. Lower production costs with FWD, and Toyota was more concerned with another Japanese manufacturer: Honda. Honda was quickly becoming the company to go to marketing war with, not Nissan. Nissan was becoming known for...? They were, by the mid 80's, beginning to lose their focus. Yes, the 300ZX would persist into two more generations, keeping the Nissan brand name in the public eye. But the rest of their cars would, over the course of the next decade or so, become lackluster compared to the other two manufacturers. Toyota and Honda would duke it out in the 90's and even the first decade of the new millenia, while Nissan quietly built cars, ultimately lost their Z legacy for awhile, and the S-chassis was like a good television rerun. It's old, you can enjoy it, but nothing new seems to equal what used to be.
Did Nissan's S12 hold it's own? Sure, for awhile... I think consumers in the United States bought enough of them to prove that, and the V6 versions did indeed sell. The S12 endured as a consumer choice whereas the AE86 is only kept alive by performance enthusiasts and drift fans. If anything, the drift craze has caused the S12 to become noticed again by performance enthusiasts, so now it has both daily driver owners getting groceries as well as is beginning to enjoy the fandom that the AE86 community needed a cartoon to get.
S12 has begun to see "drift tax" on resale price. Just read the for sale ads and you'll find that here and there.
S12 is a better built car than the AE86, and has more modern features.
S12 was designed to best the RA65, and it did so. Unfortunately for Nissan, they missed the boat by a few years, because everyone else in Japan was switching to FWD at the time. When the S12 was new, the fresh opinion was that RWD was for legit racecars and sportscars, and anything less than balls-out was better off FWD. Of course, Nissan didn't get the message, because the S13 was produced. And honestly, it never sold as well as the S12. And certainly never as well as the Civic or the Accord, or the (then) newer Acura line of cars.
Now, this is all my opinion. But the point here is that in no way was or is the S12 the rival of the AE86. The AE86 had no rival then, because it was the oddball. It has no rival now, because it's mostly supported by fandom and drifters. The S12 was originally designed to compete not with the AE86, but with the RA65. And nowadays, it's still mostly under the radar. Where it isn't, it's associated as a "lesser S13", and not as an alternative to the AE86. At least among those who know Japanese cars. Anyone with enough car ignorance can judge that it's RWD, came as a hatch and coupe, and has angular lines, and say "they're the same thing".