"I would rather have people look at the incremental profit growth as remarkable given the pressure on investments and material prices," Katsuaki Watanabe, who took the helm last month, said in an interview with several Western news agencies.
"It's more important to make sure the growth is steady than to have sharp jumps in profits," he said.
The world's second-biggest auto maker does not provide consolidated profit forecasts, but it is widely expected to post little growth in the current business year to next March with plans to spend a record 1.25 trillion yen ($11 billion) to invest in overseas factories and other facilities.
The expected slow growth would follow a 0.3 percent rise in operating profit to 1.672 trillion yen last business year as vehicle sales jumped 10.3 percent to 7.41 million units.
Last month, the maker of the Camry sedan announced its seventh North American assembly plant, while it is also setting up shop in Russia and expanding in other emerging markets.
"We still have 2 million units to go to bring total output to the world's top level, and that's going to require more investments," Watanabe, a 63-year-old Toyota City native, said.
"I don't think we should skimp on R&D costs either. We've come to a phase of high fixed costs, and this is going to remain for a while."
Japan's top auto maker leads the industry in the development of next-generation vehicle technology such as gasoline-electric hybrids, and expects to spend 770 billion yen on R&D this year. The maker of the popular Prius hybrid sedan has said it aims to sell 1 million hybrid vehicles a year "as soon as possible."
Watanabe declined to venture a guess on when that might be, saying only that Toyota's overall sales may be around 10 million units at that time.
"We should reach (the preliminary goal of) 300,000 units around next year," he said. "But we need to halve the premium of 400,000 to 500,000 yen that customers pay now for hybrids to raise volumes, and we'll need a technological breakthrough for that."
Watanabe repeated Toyota's goal of eventually offering the hybrid powertrain on all models across its line-up, including on pickup trucks and more sport utility vehicles, but said it was far from deciding which models to start with.
On hydrogen-powered fuel cell vehicles, Watanabe said he hoped to reach an agreement soon with General Motors on how to cooperate in the field to enable commercialization of the zero-emission cars.