Big is beautiful is a long time adage of the car industry. The giants of the business have all the advantages: size, power and economies of scale that the lesser players will never be able to match. Ultimately, only four or five mega groups of makers will be able to survive and stay the distance. Or so the theory goes….

The big three

If we look across the world stage, however, there are three manufacturers that have consistently mounted their own kind of challenge to that particular scenario and co-incidentally, they are all based in Japan. They are: Mazda, Subaru and Mitsubishi.

All three are midsize makers, living and working in the shadow of Japan’s ‘Big Three’ (Toyota, Nissan and Honda), to say nothing of the GMs, Fords and Volkswagens of this world.

But how about this: Subaru is now regularly outselling Volkswagen in North America. Mazda has just announced the biggest operating profits in its 94-year history. And Mitsubishi, big in trucks and SE Asia, is also profitable, expanding and still very much a player.

Each has found its own way to reform and survive in the tough, post-Lehmann world, whether it’s through skilful collaboration (Subaru with Toyota; Mitsubishi with PSA and Nissan) or simply by developing its own new technology and going it alone (Mazda).

Are our small but plucky Japanese trio major players in the European fleet sector? The answer this time would have to be no, although with the Mazda6 SKYACTIV diesel 2.2, Mazda does have a genuine competitor to challenge the likes of Mondeo and Insignia.

Mitsubishi, too, deserves acclaim for its ground-breaking 44g/km Outlander Plug-In Hybrid, a new model that co-incidentally it also developed all on its own.

Subaru? Right now, it simply cannot produce enough cars to meet demand in key markets such as Japan, the US and Australia. Its brand value has rocketed 70% on the year to $1.16 billion, according to a recent Interbrand Japan survey.

So Mazda, Subaru and Mitsubishi continue to confound those who maintain that one or all of them will never last and their only hope is to merge or be taken over by one of the big guys. Around 10 years ago, the figure of ‘four-million’ also appeared: as in, as a manufacturer, you had to be building and selling four million units a year or face oblivion.

It wasn’t long before that pet theory was discredited. Honda, for one, was building around 2.2 million a year at that time and generating huge profits while doing so. Honda’s top brass publicly poured scorn on the ‘four-million’ figure and soon it faded away.

More recently, Fiat CEO, Sergio Marchionne, remarked that in the future, the industry would consolidate into five large makers, each producing around five or six-million units a year. In a post Lehmann world where premium makers keep expanding and volume builders are pressurised as never before, you can follow the logic. So how is it that Mazda, Subaru and Mitsubishi are still able to stay on the pace?

Mazda's ace in the pack

Let’s start with Mazda. Although linked with – and in recent years virtually controlled by – Ford USA, Mazda still has its own spirit and culture burning strongly in Hiroshima. Its product development capability remains outstanding and its ace in the pack is its lightweight SKYACTIV technology: developed all in-house and, at heart, an ingenious evolution/development of existing technology.

So no big need for heavy capital investment or reliance on risky new hardware. Instead, in the latest generation SKYACTIV models, particularly the Mazda3, Mazda6 and CX-5, Mazda has succeeded in building a series of appealing new cars that are as good to the eye as they are to drive, with class competitive ‘green’ numbers also a key part of the package. Again, what’s truly remarkable is that Mazda put this all together independently, in ‘high yen Japan,’ at a time when its finances were under severe strain and Ford, its long time partner, was about to cut off life support, post Lehmann.

The new Mazda2 is also in the wings and at its new Mexican plant, Mazda will build a Mazda2-derived supermini for Toyota to sell in the US. The fact that a Toyota will have a Mazda engine under the bonnet will be a stunning world first and shows how far Mazda has come and the industry respect its SKYACTIV engineering is getting.

It’s true that the weakening yen has had a big hand in boosting Mazda’s recent profits, up to a record ¥1.82 billion (€1.36 billion) in operating profit in the latest financial year. While Mazda still has nothing like the clout of the top players, if you want to see how a mid-size maker can challenge the system on its own merits, just look at Mazda.

Mitsubishi's new-found competitiveness

Mitsubishi is a long time member of Japan’s ‘Big Five’ manufacturers (Toyota, Nissan, Honda, Mitsubishi and Mazda, in that order). But the past decade has been tough for the builder of the classic Lancer Evolution and Shogun off-roader.

An on-going row about recalls has severely dented its reputation in Japan, Mercedes has come and gone as major shareholder. Mitsubishi has shut down production in Europe and Australia and its key US arm is still hanging on by a thread.

But Mitsubishi is still big in SE Asia, with trucks and SUVs and has key production co-op deals with PSA and Nissan in place. The clever Outlander PHEV has received rave reviews and together with attractive recent show models such as the Concept XR-PHEV, illustrate Mitsubishi’s newfound competitiveness. Ultimately, the company also has the backing of Japan’s giant Mitsubishi Corporation and that’s some backstop.

Subaru's cult status

Subaru might seem to have a limited presence in Europe but it has a strong cult following in Japan and in the US, Subaru is simply on fire. Sales just keep on rising, and in 2013 for the sixth year in succession.

Last year, Subaru sold a record 423,683 US units, Volkswagen (which still has trouble ‘understanding’ the US market) came in with 407,704 units. Subaru, with its unique boxer engine/4WD format, has found its own premium niche in the market and appeals to free thinkers in a kind of left field Apple vs Windows kind of way.

Subaru is still a small operator, building some 800,000 units a year to Mazda’s 1.26m and Mitsubishi’s 1.24m units, but is nicely profitable (as are Mazda-Mitsubishi). One key is the link with Toyota, which owns a 16.5% share in Fuji Heavy, Subaru’s parent company. Subaru and Toyota have collaborated in production and product sharing, most visibly in the cracking BRZ/GT86 sports coupe. But at the end of the day, Subaru is still Subaru. Meantime, as a sign to the future, Toyota has also helped Subaru (and Mazda) with its first hybrids in Japan.

Surviving the downturn

As ever, the car industry remains a fast moving place but while commentators, analysts and even CEOs such as Fiat’s Marchionne continue to talk about mega groups of companies and, by extension, smaller/middle rank makers being absorbed or taken over, it just hasn’t happened, despite this kind of doomsday analysis being regularly aired over the past 20-something years.

Time and again, Japanese makers have shown this extraordinary ability to survive downturns, crises and competition of the severest kind, which is not to say another global financial meltdown wouldn’t throw everything off course.

But in today’s world, Mazda, Mitsubishi and Subaru show how midsize makers can still have their place at the big table with the right vision, set up and of course, the right product. Proof that you don’t always have to be "big" to be "beautiful".