i always suggest in a carrier, but i allow a few of my birds to ride free in the car with me. The carrier is much safer as it protects them in potetinal accidents and so on.
I have a small little pet carrier I picked up for about $15 at Walmart and its perfect. I've got a towel at the bottom so it's not slippery. Nothing fancy.
We use a pak o bird, with the seatbelt threaded through the loops on the back to stop it moving around. I find it's good, particularly on long car trips because there are no metal cage sides rattling the whole time we're driving.