Sack covers top of luxury car part (4)
I believe the answer is:
axle
'car part' is the definition.
(part of a car)
'sack covers top of luxury' is the wordplay.
'sack' becomes 'axe' (both can mean to dismiss or cancel employment).
'covers' is an insertion indicator.
'top of' indicates taking the first letters.
The first letter of 'luxury' is 'l'.
'axe' going around 'l' is 'AXLE'.
(Other definitions for axle that I've seen before include "Metal pin on which wheel revolves" , "need of wheeled cart?" , "Shaft with wheels attached" , "Bar on which wheel revolves" , "It's pivotal" .)