As of yet, there hasn't been a whole lotta competition for the P32. The only other .32 ACP pistols I know of in its size category are the Beretta Tomcat (MUCH thicker, more expensive, a bit heavier, and prone to frame crack failures) and the Seecamp 32/North American Arms Guardian 32 (both similar in design and VERY heavy, being all stainless steel, and much more expensive). Also, the P32 is the only one using a locked-breech/short-recoil design like conventional full-sized pistols, making it a very soft shooter, whereas all of the others made by competitors use blowback designs, which tend to make them heavier and have more felt recoil (although still quite mild). So really, at the moment, Kel-Tec kinda has the market cornered as far as itty-bitty .32 ACP pistols go.
That said, I still feel like KT is going to end production of the P32 eventually, perhaps sooner rather than later, as they've already killed off other models in their lineup (P11, PF9, P3AT) in favor of newer designs (P15) and due to slumping sales. The .32 ACP cartridge isn't exactly a hot rod of a round, being quite small and slow and lightweight compared even to .380 ACP, and anything but FMJ is inadequate to reach minimum penetration depth, so .32 ACP pistols aren't exactly hot sellers, in general. I don't imagine it'll take a lot to convince KT to kill off the P32 for that reason alone - not enough demand to justify continuing production.