The carmaker, which claims to have the largest number of connected cars on the road, will work with IBM to create new business opportunities in the automotive distribution, smarter city and retail space.
Data could be used to inform road-building decisions within cities, and develop smart communication services to help ease traffic and congestion, for example.
Competitor BMW has previously said it would not sell any of its customer's car data to third companies.
Brigitte Courtehoux, PSA Peugeot Citron's connected products lead said: "We realised early on that connected vehicles, as part of the Internet of Things, were a key factor in the improvement of the customer experience towards our Brands.
"In partnership with IBM, we are unleashing connected services to the masses, so consumers can experience a new level of comfort and convenience from their cars, while industries seize new opportunities to deliver personalised services."
The firms first struck a deal last year, when the carmaker turned to IBM for its Big Data and Analytics tool and MobileFirst Solutions to help provide connected services to drivers,
Now, an expanded seven-year agreement will focus on commercialising these services to other customers, and building technology that other clients will benefit from, all marketed from an Innovation Centre in Paris.
IBM's global automotive lead, Dirk Wollschlger said: "Under this partnership with PSA Peugeot Citron, we are pushing the boundaries of mobility even further to give a broad set of industries the opportunity to tap the promise of the connected car."
Meanwhile, BT's automotive senior business development director, Martin Hunt today claimed that almost all connected cars had security flaws.
In a blog post he wrote how security and data privacy had been a hot topic surrounding connected and increasingly driverless cars.
Hunt said: "Unfortunately, like any other computer, the connected car can be hacked, with almost 100 percent of connected cars showing security weaknesses".
The car industry has "struggled" to tackle the issue, he added.
"Many companies have been unaware of or unable to report on hacking incidents involving connected cars."
This story, "Peugeot and IBM to develop services using connected car data" was originally published by Techworld.com.