Capital icon is a convertible (7)
I believe the answer is:
nicosia
'capital' is the definition.
(capital of Cyprus)
'icon is a convertible' is the wordplay.
'convertible' indicates anagramming the letters.
'icon'+'is'+'a'='iconisa'
'iconisa' anagrammed gives 'NICOSIA'.
(Other definitions for nicosia that I've seen before include "capital city" , "Casino I find in Cyprus - that's capital" , "Divided city of Cyprus" , "European Union's most southerly capital" , "Divided Cypriot capital" .)